Economy heading for collapse, ACN warns Fed Govt

The economy is heading for collapse, the Action Congress of Nigeria (ACN) raised the alarm yesterday.

The party said the oil industry, which is the mainstay of the economy, is threatened by fraud and the vagaries of international politics.

It warned in a statement by its National Publicity Secretary, Alhaji Lai Mohammed, that unless “urgent measures are taken to diversify the economy and shore up oil production…the government may not be able to pay its bills, including workers’ salaries within the next few years.”

Mohammed said: ‘’Contrary to what the Federal Government may say, this warning is not about crying wolf but is actually borne out of a patriotic fervour devoid of politicking, which is the usual refrain of this government when alerted to its shortcomings.

‘’We will like to be proven wrong, but this will depend on uncommon and monumental effort, rather than on the basis of the usual canned response from the government.’’

Giving reasons for its call, the ACN said: The cost of oil production which has skyrocketed from four dollars per barrel in 2002 to 35 dollars presently; the massive corruption in the oil sector, with oil theft and sabotage leading to lost production and costing Nigeria some six billion dollars annually in crude theft; the sharp fall in the discovery of new oil and gas reserves due to the low investment in the sector, and the most serious of all, the challenge posed by alternative sources of global supply of oil and gas.”

The party said the cost of oil production rose from only 4 dollars per barrel in 2002 to 7 dollars per barrel in 2005 and, from the 12 dollars per barrel at the onset of the Yar’Adua/Jonathan Administration in 2007 to 35 dollars per barrel in 2012, according to the just-concluded Nigeria Oil and Gas Conference in Abuja, where the mind-boggling cost hike was attributed to the cost of security in the Niger Delta (put at 16 dollars per barrel), it said.

‘’In other words, the gains recorded from ending militancy in the Niger Delta due to the Amnesty Programme have been wiped off by the cost of maintaining the ‘peace’. Here is how Shell Nigeria MD Mutiu Sunmonu described the situation: ‘Operating in the Nigerian oil and gas environment can be long and tortuous with costs at the high end of the global scale. There are a multitude of security related issues that have to be dealt with on a daily basis.

‘’’In the recent past, militancy has simply been replaced by Industrial Scale oil theft and sabotage(emphasis ours). We, and others, have had to shut-in significant production; spend huge amounts on replacing and repairing hardware and deploying massive resources to clean up spills’.”

On the discovery of new oil and gas reserves, ACN said the disastrously-low level of exploration activity in Nigeria is supported by the statistics released by the US Department of Energy for deepwater discoveries from 2009 to 2011 in which Brazil alone contributed some 40 new discoveries or 20 percent of the global total, US and Australia contributed 10 per cent each, countries like Ghana making nine new discoveries or 5 per cent of the global total, while Nigeria had only 4 discoveries or 2 per cent of the global total during this period.

This paltry discovery of new oil and gas reserves is due to the low investment in the sector, which needs to attract 15 billion dollars annually in capital investment, up from the present 3 billion dollars, in order to remain a significant global oil supplier and a respected player in OPEC.”

The statement added: ‘’Here are the facts: The US has more than doubled its estimates of recoverable domestic Shale-gas resources to some 827 trillion cu. ft.

(23 trillion cum), more than 34 times the amount of gas the US uses in a year.

Together with supplies from conventional gas sources, the US may now have enough gas to last a century at current consumption rates.

‘’Last month, the agency released a similar announcement in respect of Shale oil to the effect that California’s valleys alone hold as much as 15.4 billion barrels of Shale oil, which companies were hitherto unable to reach because the oil exists in pockets of rock that were expensive to reach before the present advancements in fracking technology. Similar announcements are being made in Europe and parts of Asia.

‘’For the first time in nearly a decade, the US has regained the position of being the world’s largest producer of natural gas and soon also oil. Thus, in less than five years, the US has gone from seeking new sources of oil and gas overseas to being self-sufficient. Industry experts believe that Shale oil and Shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels and alter oil geopolitics.

‘’The announced objective of the US Government is to drive down oil prices from the current 100 dollars per barrel to 50 dollars per barrel within 2 years. If this happens, which is very likely in view of the alternative sources, Nigeria, with a cost of production of 35 dollars per barrel, would immediately go out of business, with dire consequences for an economy that thrives largely (if not solely) on oil,’’ the party said.

It said the signs of imminent trouble are already visible for those who are willing to see: The Brass LNG Project is unable to take Final Investment Decision (FID) because of the collapse in the US LNG market and rising costs; and a similar situation faces the Olokola LNG Project.

The party urged the Federal Government to put on its thinking cap in order to rise to the challenges listed above and save Nigeria’s economy from collapse, adding that any delay could mean that those in charge of the country’s affairs would not have enough time to change course as the ship of state heads for the rocks.

Thump up for mr Layi Muhammed. You have blowned the trumpet, it is left to jonathan led presidency to dance to the tune. If fails, the generations unborn would know that at a point in time you aired your incomparable voice to obvious looming danger ahead. Enough words for the WISE. A stitch in time saves nine.

ajet

THANKS,MR LAI FOR INFORMING THE NATION.F,G,N SHOULD STEP UP.

afo gurantor

It’s unfortunate that the presidency are more preoccupied by the NGF election, the challenge posed by the mega party {APC}, useless tour of states by info minister and co that will last for about 4 months and gulping millions of naira without any tangible benefits attached, all in the name of securing a 2nd term for jonathan, 2015 election, the challengeS of the northern and igbo presidency…… THAN listen to your unquantified and clarion call that ought to propel them for actions that will save Nigeria. Meanwhile, doyin okupe and one time vibrant and respected but now jobber and domb orator abati will do their usual “throw away the bath water and the baby” practice by jettision the call and term it ‘politicking’. Am sorry for them. Where are the ” fani kayode, remi oyo, frank nweke jnr…[all obasanjo’s mouth pieces]; olusegun[Yaradua’s mouth piece]….? All is history. My advice to mr Layi Muhammed is that, you should not let their[pdp and presidency] usual practice of term everything ‘politicking’ derail or sway you from the good work you are doing for the good nigerians that appreciate it. Thump up for you again. I wished LAYI MUHAMMED reads this PIECE. God bless NIGERIA.

ARINZE

please we should allow this man(goodluck jonathan)to do his work as God’s directives and take nigeria to the next level.

Ogbeni Naija

Even with your APC or Aspiring can not heal our economy,rather it will make the problem relapse.It can NOT be better than PDP.You are all the same. The billions of naira your ACN took as bribe to edge out Ribadu nko.BABA I BEG GO AND SIT DOWN.YOU NIGERIA POLITICIANS HAS NOTHING UPSTAIRS THAN TO ROB US OF OUR TREASURIES.

Mr TI

Death rate in 9ja is high, birth rate also high. No pop control may God help us.

Ogbeni! This is not time for politics. I think PDP will appreciate this piece.

Nathan

Mr Lai, have you alerted the federal government that petrol can now be synthesized from air? The firm pioneering this project presented it to the scientific world late last year and hopes to go into commercial scale in the next 15 years. I know the leaders will rather steal more money than investing and diversifying the economy for a better tomorrow.

Joebayla

Mr Lai, there is nothing new about your claims. I wonder why you have forggotten so soon what lead to planned removal of subsidy in 2012. Have you forgotten so soon the position of the CBN Governor and the Minister for Finance on the sustainability of subsidizing the consumption of petrolum product as at 2011? Have you also forgotten so soon the protest that followed the removal of fuel subsidy and the associated actions? what was your position then?

Stop deceiving Nigerian with your political grammars and all of you are the same.GOD will save us from your political gimmick.

Maigida

D man has spoken with statistics he deserves a hearing at least even if for the sake diversifying to other sectors. USA laid low, bang they have oil and gas that can last them. What stops us from thinking that we had been exploited in the past, let us take control of this oil biz properly and stop selling crude but finished prdts.

At lease wheather true or not LAI and the ACN have siad their own,let the sitting government federal govt.do what is right before things fall apart finally in nigeria.

Nigerians are really watching ooooooo,let joha be informed.

o. osundina

a people deserve the kind of government they have. i have seen seven decades in my life but i have not
seen this kind of government comprising thieves, liars and buffoons.

Abis USA

This is the real information s Nigeria Journalists need to hold on .But I don’t know what is wrong with most of them that whenever they write an important issue they do not know how to pursue to last.
Journalist don’t give up on important cases and that is why they are intermediary to feed people the real facts. Please ,I am begging Nigerians to keep it up .God will be with them.

This type of clarion call is not new to a government that is sleeping or dozing.
I mean Chief Obafemi Awolowo did the same before he died to the govt of Alh Shehu Shagari. What happened after? And the result is still what we are seeing today. God help Nigeria.